Call for government to revitalise US nuclear industry

15 August 2017

The US government should hold "a structured conversation" with the country's nuclear industry on ways to restore and develop the sector, according to an essay from Mark Hibbs, senior fellow of the Carnegie Endowment for International Peace's nuclear policy program.

"The pending bankruptcy of Westinghouse, announced five months ago, could have far-reaching strategic impact on US exports and on the economic viability, safety, and security of nuclear power installations in the United States and beyond," Hibbs says.

However, he notes that the Chinese and Russian nuclear industries "appear immune to and poised to capitalise on the problems that have beset Western firms". Both countries have ambitious plans to export their nuclear power technology around the world.

"There are four basic reasons why nuclear power plant exporters and their governments in the United States and other western countries should be keenly concerned about China's and Russia's understandably ambitious forays into future nuclear power plant markets," according to Hibbs.

Firstly, he notes that both Chinese and Russian companies planning to build reactors abroad are state-owned enterprises (SOEs), which puts them at a competitive advantage. "The US nuclear industry is a strategic industry, but Westinghouse and GE are privately owned companies, not SOEs," he says. However, he suggests a federal government bailout of Westinghouse is "neither likely nor desirable". He suggests, "The polarised political culture in Washington will prevent other, constructive partial solutions, such as the imposition of a carbon tax that would make nuclear power more cost competitive with other sources of energy."

Hibbs says China and Russia also have "strategic trade penetration". Both Beijing and Moscow have signed memorandums of understanding and other bilateral agreements with potential customer countries. These will provide them "access to strategic decision-making in these countries concerning technology, energy, and foreign policy for decades to come".

The governments of China and Russia are also committed to their nuclear power technology, the essay continues. "Countries that import nuclear power plants commit to managing this technology over a project life cycle of a hundred years. They will be less inclined to buy turnkey wares from partners that do not inspire confidence that they will be using nuclear power for more than one or two decades." During the last 20 years, while China and Russia built dozens of reactors at home over, leading Western vendors virtually stopped constructing new units. "Western firms' long-term loss of domestic expertise and political support will negatively ripple across their entire supply chain, and both the economics and the safety of installations operating in these countries may in coming years be threatened," Hibbs suggests.

He also warns the USA could lose its leadership in international nuclear governance "in the face of a future shift towards newcomers and away from established nuclear technology-owning countries".

Western nuclear power companies want their Chinese and Russian competitors to "engage fairly", Hibbs says. However, they do not want "to sacrifice the real benefits that come from partnering with Chinese and Russian industry, led off by market access and opportunities to take advantage of non-Western firms' genuinely lower factor costs".

The Trump administration, he says, should discuss with the US nuclear industry what steps the government should take to "enhance US nuclear exports and encourage a level international playing field for exporting nuclear equipment, material, and technology, especially to risk-bearing destinations".

"This might lead the White House to make better use of the US Export-Import Bank and to establish bureaucratic lines of authority to favour a more coordinated and strategic view in the federal government about nuclear trade."

Commenting on the essay - titled Does the US Nuclear Industry have a Future? - Ted Jones, director of supplier programs at the Washington, DC-based Nuclear Energy Institute, said: "The US nuclear industry has been competing not just against foreign companies but also against their governments - which seek the unique strategic benefits of a nuclear energy supplier. For our nation, much more is at stake than billions in US nuclear exports and tens of thousands of American jobs."